By Adam Oldfield, Phoebus Software – This article first appeared on Mortgage Finance Gazette

Straight through processing, frictionless banking, process optimisation – call it what you will but our industry continually searches for that perfect balance, ultimately creating the most optimal customer experience, says Adam Oldfield.

Invariably, achieving the perfect customer experience is not entirely down to tech: there needs to be an understanding of regulatory compliance, a knowledge of the context of the financial services landscape and the human psychology of what actually makes a good user experience. 

For example, “frictionless” as a buzzword we hear regularly, not just in finance. But those in the know are already questioning the value of “frictionlessness”: is it really something to be desired at all costs? 

Of course, banks, lenders and financial institutions need to create as hassle-free a process for their customers, including brokers, as much as possible in order to stay competitive. If a customer perceives friction such as repetition or a long form-filling exercise in any transaction, they are likely to abandon the process and take their business elsewhere. 


Potential downsides 

But if you take the concept of “frictionlessness” to its ultimate conclusion, this presents problems. Firstly, while zero-click transactions have been proven to be possible, this removes any interaction whatsoever. Great for convenience, but very difficult for customer engagement. 

And more importantly, from a security point of view, if the customer perceives the process as being too easy, they may become disconcerted at the lack of apparent security processes. Where personal money or borrowing is concerned, most humans prefer a tangible element of security hurdles, if only for the reassurance that they are being kept safe. 


Thirdly, of course, there is regulation and credit risk to consider, another non-technology inhibitor. For example, totally frictionless mortgages used to exist many years ago, but are now a relic of the past: the regulator and the market’s appetite for risk have seen to that. 

Finally, even taking into account all of the above, if it is too easy for customers, they simply don’t believe it. They’ve been known to take a smooth, online journey for a big life decision like a mortgage, but then not felt comfortable to make a payment for the valuation. So they break the online journey and call the lender, thus entering into a conversation involving advice, cost and time for all parties. 

Balancing the friction levels 

For these reasons, we advocate “friction-right” rather than “frictionless”. You need to dial your friction levels just so, rather than remove them altogether. Right amount of friction for the right product at the right time. 

So just as we need to strike the right balance between friction and frictionlessness, we also need to strike the balance between security and obscurity. 

Having considered what level of security the customer experiences at the front end, we also need to think about what is required behind the scenes – because without a back end that is 100% secure, a bank, financial institution or lender will immediately be out of the race. In today’s world of mobile and 24/7 banking, the institution needs to consider a whole new level of security requirements. 

How and who you chose to support you on this ever-evolving journey is paramount, as the solution you settle on today, will change tomorrow! Create the right relationships with the right partners to ensure this is central to your ongoing evolution rather than revolution.

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